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Full-Text Articles in Social and Behavioral Sciences
Multi-Stage Oligopoly Models With Nested Logit Demand Structures: A Simplifying Approach, Xosé-Luís Varela-Irimia
Multi-Stage Oligopoly Models With Nested Logit Demand Structures: A Simplifying Approach, Xosé-Luís Varela-Irimia
Xosé-Luís Varela-Irimia
In oligopolistic markets where firms sell multiple products in different segments the nested logit framework is a common approach to model durable goods demands. In these settings, multi-stage oligopoly models are used to study relevant firm decisions, such as market entry or the relation between competition and location. The rationale for making decisions in these contexts is comparing the profitability of the alternative choices. However, solving these models to obtain profitability measures easily becomes a complex task when using nested logit demands. This paper shows that when within-segment firm shares are equal across segments, the analytical expression for equilibrium profits …
Age Effects, Unobserved Characteristics And Hedonic Price Indexes: The Spanish Car Market In The 1990'S, Xosé-Luís Varela-Irimia
Age Effects, Unobserved Characteristics And Hedonic Price Indexes: The Spanish Car Market In The 1990'S, Xosé-Luís Varela-Irimia
Xosé-Luís Varela-Irimia
This paper computes and compares alternative quality-adjusted price indexes for new cars in Spain in the period 1990-2000. The proposed hedonic approach simultaneously controls for time-invariant unobserved product effects and age effects, that can be interpreted as a proxy for time-variant unobservables. The results show that the non-adjusted price index largely overstates the increase in the cost of living induced by changes in car prices and that the previous evidence for this market have not measured the real extent of that bias, probably due to the omission of controls for unobservables. It is also shown that omitting age effects can …